Wall Street banks predict oil will reach US$100 per barrel after COVID

Feb 23, 2021 News

The Liza Destiny FPSO.

Kaieteur News – Two Wall Street banks, JPMorgan Chase and Goldman Sachs, are predicting that the price of oil will soar when COVID-19 eases, according to a report from the Financial Post.

Head of Oil & Gas at JPMorgan Chase, Christyan Malek.

Goldman Sachs analyst. Jeffrey Currie.

“The most bullish forecast has international crude prices staging a comeback towards the US$100-a-barrel region — a level not reached since 2014,” it said. “The expected surge is predicated on the belief that fiscal stimulus will boost consumption just as investment in new production has been sucked out of the industry. Such a disconnect between demand and supply, fuelling a lasting surge in prices, are the basic conditions of a so-called supercycle.”
The Post quotes the head of oil and gas at JPMorgan, Christyan Malek, as saying, “We’re going to be short of oil before we don’t need it in the years to come… We could see oil overshoot towards, or even above, US$100 a barrel.”
Goldman Sachs analyst Jeffrey Currie reportedly registered his belief that there are real risks that oil will trade in the US$80 range “or even higher this year.”
Arjun Murti, another expert who had worked with Currie when predicting a previous oil price high, said that projections of a supercycle are premature, but that he can imagine scenarios where oil prices strengthen significantly, according to the Post.“Before the pandemic, global oil demand was around 100 million barrels a day,” Financial Post said. “It fell to an average of around 90 million bpd last year and analysts predict it is unlikely to reach pre-pandemic levels until 2022, once vaccine rollouts allow a wider resumption of long-distance air travel.”
Murti is reported as saying, “There are still some hurdles to cross but a lot will be decided by the strength of demand.”
Murti’s scenarios for a supply gap would see oil demand increasing by 1.2 million to 1.4 million barrels per day. He argued that a 500,000 bpd increase in demand would not be enough for a supply gap.
French hedge fund manager, Pierre Andurand, is quoted as saying “The path of the oil price is very much in OPEC’s hands for this year, depending on how much supply they choose to release back on to the market.”
OPEC has included in recent reports that it sees Guyana among countries key to recovery of global oil supply, when the pandemic abates.
ExxonMobil intends a dramatic increase to its Guyana production in the next few years to more than 750,000 barrels per day. The company sees potential for up to 10 Floating Production, Storage and Offloading (FPSO) vessels in the Stabroek block, which could take production to two million barrels of oil per day, uniquely positioning Guyana to benefit from an oil supercycle.